Donor Advised Funds vs. Private Foundations

When compared to a private foundation, a donor advised fund at The Community Foundation is a smart way to achieve your philanthropic goals with greater tax advantages, fewer administrative hassles, more cost savings and a highly comparable level of grantmaking flexibility.

Private foundations that transfer assets to The Community Foundation enjoy immediate excise tax relief, freedom from reporting requirements and lower administrative costs. This often means that more of the foundation’s assets can be used for philanthropic purposes.

We hope you will find this information useful:

CFWNC
Donor Advised Fund

Private Foundation

Donor Involvement

Donor recommends grants to qualified nonprofits. Grants are approved by The Community Foundation board.

Donor appoints board, which controls all grantmaking decisions.

Tax Status

Public Charity – no tax on fund balance or income.

Private Charity – subject to annual excise tax of 2% of assets.

Income Tax Deductions for Gifts of:

Cash

Up to 50% of adjusted gross income (AGI)

Up to 30% of adjusted gross income (AGI)

Appreciated Stock

Fair market value up to 30% of AGI

Fair market value up to 30% of AGI

Real Estate and Closely Held Stock

Fair market value up to 30% of AGI

Cost basis up to 20% of AGI

Costs

Initial fees

None

Several thousand dollars in legal and accounting fees and filing expenses

Minimum contribution

$10,000

$5 million+ recommended

Ongoing costs

$250 and up annually, depending on type of fund and balance.

Annual accounting, investment, reporting and tax services.

Grantmaking Focus

Determined by donor

Determined by donor

Grantmaking Effectiveness and Support

Fund is supported by a professional staff, knowledgeable about community needs and nonprofit effectiveness.

Burden of knowledge about need and effectiveness is on the donor, paid staff or consultants.

Payout Requirements

None

5% of net asset value

Reporting Requirements

Handled by The Community Foundation

Annual IRS Form 990-PF must be filed and made available to the public

Accountability and Liability

Donors may remain anonymous The Community Foundation monitors regulatory requirements

Donors are named on the 990-PF Board responsible for adhering to regulations on investments and grantmaking. Significant penalties can apply.